Milling & Baking News - August 17, 2004 - 17

F I N A N C I A L

R E S U L T S

Ralcorp quarterly income up after
acquisitions earlier in ﬁscal year
ST. LOUIS - Net income of Ralcorp
Holdings, Inc. in the third quarter ended
June 30 totaled $24.6 million, equal to
84c per share on the common stock, up
54% from $16 million, or 55c per share,
in the third quarter of 2003.
Net sales for the quarter were $386.3
million, up 25% from $311.5 million last
year.
Net sales for Ralcorp's Cereals, Crackers and Cookies segment were $193.8
million, up 14% from $169.9 million in
the same year-ago quarter. The Bremner
cracker and cookie division grew $16.9
million while the Ralston Foods cereal
division added $7 million.
About half of Bremner's net sales
growth was the result of the acquisition of the Concept 2 Baker business
(see Milling & Baking News of Feb.
22, Page 1), while the rest came from
incremental sales to customers of an
insolvent competitor and increased
sales to existing private label customers, Ralcorp said.
Bremner began supplying products
to several of Bake-Line Group, L.L.C.'s,
former customers after Bake-Line ﬁled
a Chapter 7 bankruptcy petition and
ceased operations on Jan. 12, 2004.
Sales should continue to increase into
the fourth quarter as additional products are sold to former Bake-Line cus-

tomers, but the effects may be partially
offset by declining co-manufacturing
sales, the company said.
Base cookie and cracker volumes were up 11%. Bremner's
in-store bakery cookie sales
volume, excluding C2B sales,
was 2% above last year's
volume.
At Ralston Foods, sales
volume of private label readyto-eat cereal grew more than 12% from
last year's third quarter, driven by
signiﬁcant expansion with existing customers and new product introductions,
partially offset by the loss of sales to
Fleming Companies, Inc., as a result of
its bankruptcy.
The R.-T.-.E. cereal sales volume increase was partially offset by volume
declines in smaller product lines, including a 14% drop in food service, a 2%
decline in hot cereal and a 9% decline in
co-manufacturing.
The higher volumes resulted in production efﬁciencies on several lines
but the beneﬁts were partially offset by
higher costs of ingredients derived from
rice, corn, wheat and soybean oil, as well
as by increased freight and energy costs.
Many of these costs are expected to remain at elevated levels, which could reduce proﬁt margins, the company said.

Safeway's quarterly earnings dip
as labor dispute impact lingers
PLEASANTON, CALIF. - Safeway Inc.,
the fourth-largest U.S. grocery retailer, saw
its net income slip 3.6% in the second quarter amid lingering effects from last winter's
labor dispute in the Southern California
supermarket industry.
The company said it earned $155.2 million, or 35c per share on the common stock,
in the quarter ended June 19, compared
with $161 million, or 36c per share, in the
same period last year.

Excluding about $50 million in expenses
tied to the ongoing recovery from the labor
dispute, though, Safeway said it would have
earned 46c per share during the quarter.
That dispute included strikes and walkouts of about 70,000 workers at chains owned
by Kroger Co., Albertsons, Inc. and Safeway.
The four-month standoff ended Feb. 26, but
Safeway has instituted promotional pricing
and other special marketing efforts to encourage shoppers to return to its stores.

The Andersons ag group operating income
improves 39% from year-ago quarter
MAUMEE, OHIO - Higher average grain
prices, increased storage income and a greater
number of bushels sold contributed to operating income of $10,940,000 in the second quarter ended June 30 in the Agriculture Group of
The Andersons, Inc. Overall, The Andersons
in the second quarter posted net income of
$10,062,000, equal to $1.39 per share on the
18 / Milling & Baking News, August 17, 2004

common stock, up from $7,793,000, or $1.09
per share, in the same year-ago period.
Sales were $375,899,000, up from
$312,150,000 in the second quarter of 2003.
Revenues in the company's Agriculture
Group increased $60 million from a year
ago to $268,208,000.
"The recently acquired elevator in

Other factors that curbed the thirdquarter proﬁt margins included higher
storage costs and additional label design
costs for former Bake-Line customers.
The acquisition in late 2003 of frozen
griddle products manufacturer Bakery
Chef, Inc. contributed $6.5
million in proﬁt during the
company's third quarter and
$13.2 million since the acquisition, net of $1.6 million and
$2.8 million, respectively, of
amortization expense related
to intangibles recorded in purchase accounting.
The total net sales of the new frozen
pancakes, biscuits and bread segment
were $44.8 million.
Ralcorp anticipates the acquisition
will add 25c to 35c to diluted earnings
per share on an annual basis, or 20c to
25c for ﬁscal 2004.
During the third quarter, Ralcorp
recorded $100,000 in income received
in litigation settlements, for a total of
$900,000 for the year to date. Nearly all
of the settlements are related to vitamin
antitrust claims.
The three and nine months ended June
30, 2004, included $1.2 million and $3.7
million of incremental expenses associated with large-scale information systems
upgrades and conversions. These projects
began last year with expenses of $700,000
and $1.5 million in the respective periods
and are expected to continue into ﬁscal
2006, the company said. MBN

The company said sales in Southern California have not yet returned to pre-strike
levels. Overall, though, Safeway's secondquarter revenue rose 2.4% to $8.4 billion, up
$200 million from a year ago.
Comparable-store sales, excluding the effect of fuel sales, remained ﬂat in the quarter. Including fuel sales, comps rose 2.3%.
Safeway said it realized $1 billion in operating cash ﬂow in the ﬁrst half of the year, allowing it to trim its debt since the end of 2003
by $584 million to $7.2 billion. But the company added that its full 2004 earnings likely will
hit the lower end of a previously announced
range of $1.95 to $2.03 per share. MBN

Oakville, Ind., and increased investment in
Lansing Grain L.L.C. also contributed to the
grain income improvement," the company
said. "The number of tons sold during the
second quarter by the group's plant nutrient business increased from the prior year.
Total revenues also increased due to higher
raw material costs."
In the six months ended June 30, The
Andersons had net income of $9,816,000, up
34% from the ﬁrst six months of 2003. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - August 17, 2004

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